Freeports: Wales

James Davies Excerpts

Tuesday 21st February 2023 Westminster Hall

[The Parliamentary Under-Secretary of State for Wales (Dr James Davies)]

It is a pleasure to serve under your chairmanship, Mr Vickers, and to make the winding-up speech in a Westminster Hall debate for the first time.

I congratulate my hon. Friend the Member for Ynys Môn (Virginia Crosbie) on securing the debate—I know how hard she works for the island—and thank other Members for articulating their views. Happily, we have heard a range of opinion, from north Wales and from south Wales, in support of the Anglesey bid and the Celtic freeport bid. For balance, there is a third bid in Wales, centred around Newport.

We have had an excellent debate, and I am pleased to have the chance to set out the opportunities being created by the freeports programme in Wales, as well as how it, along with other UK Government support and investments, will help to level up communities the length and breadth of the UK. As my right hon. Friend the Chancellor said last month, the Government are committed to ensuring that the benefits of economic development are felt everywhere—not just in London and the south-east, but across the UK. The Government intend to do that by spreading opportunities more equally across the country, empowering local leaders and bringing left-behind communities up to the level of more prosperous areas.

In that regard, freeports are already playing a key role in creating hundreds of thousands of jobs across the UK and helping to drive economic growth by attracting investment to their local areas and regions. Our new freeports programme in Wales, which is being delivered with the Welsh Government and backed by £26 million, of which £25 million is seed capital and £1 million Government support, will help us to make the vision a reality.

The freeports programme is one of the core parts of the Government’s levelling-up agenda, and it will look to incentivise private businesses to invest in new opportunities in Wales. We have worked constructively with the Welsh Government to design a bespoke freeports model that will deliver for Wales. It will make the most of the unique opportunities in Wales, which will ultimately benefit businesses, ports and communities across Wales.

The Wales freeports model is based on three main objectives: promoting regeneration and high-quality job creation, establishing at least one freeport as a hub for global trade and investment across the economy, and fostering an innovative environment. Freeports are magnets for investment, and businesses located in freeports will benefit from a generous package of measures comprising tax reliefs, customs advantages, business rate relief, innovation, and trade and investment support. Those tools, paired with the ambitious £26 million of public investment in seed funding, will unlock much-needed investment and high-quality jobs not just for businesses located in the freeport, but for the surrounding areas and regions.

The freeports programme will drive forward our ambitions for Wales to compete at a global level while creating new high-skill, high-wage and local jobs, putting Welsh communities on the path to long-term growth and prosperity. The freeport programme in Wales will, once the competitive process concludes, join the freeports in England and the green freeports in Scotland to help to deliver the UK Government’s levelling-up ambitions.

The operational freeports in England are already delivering jobs and investment across local areas such as Plymouth, Solent and Teesside. The newest operational freeports—the Liverpool city region freeport and freeport east, announced at the end of last year—will also drive investment and industrial growth to deliver thousands of skilled jobs for local communities and regions.

The process in Wales is well under way and I, like many others, look forward to the benefits the programme can bring to communities in Wales. We and the Welsh Government have committed to delivering at least one freeport in Wales, and we both remain open to considering the designation of an additional freeport if there are sufficient exceptional bids. Unfortunately, as we are still in a competitive process for Wales, I am unable to comment on individual applications. However, I look forward to seeing the outcome of the competition process and thank all those who developed the bids submitted in Wales.

I very much welcome the contributions to the debate. My hon. Friend the Member for Ynys Môn powerfully articulated her arguments for the Anglesey freeport. She focused on net zero, the need to boost trade flows, energy and, of course, jobs.

The hon. Member for Strangford (Jim Shannon) asked about Northern Ireland. He is no longer in his place, but I should say that discussions about extending the freeport programme to Northern Ireland are ongoing.

The hon. Member for Aberavon (Stephen Kinnock) spoke about green energy—in particular, his desire to see the success of the floating offshore wind agenda—and energy security. My right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb) echoed those comments. He particularly wanted to highlight the importance of job opportunities, energy companies in his patch, and the decarbonisation of the industrial cluster in his part of the world. He, too, spoke about floating offshore wind and the importance of the supply chain.

The right hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) kindly presented me with a lengthy list of questions, which I will do my best to answer. First, she asked about national insurance. Freeports will introduce secondary class 1 NI contributions relief for eligible employers on the earnings of eligible employees working at a freeport tax site. I am happy to find out further detail for her in due course if she writes or speaks to me.

I welcomed the right hon. Lady’s general support for the concept of freeports and having as many as possible in Wales. She highlighted her long-standing view that the Crown Estate should be devolved. Particularly in the Celtic sea, the opportunities for floating offshore wind relate also to south-west England, not just Wales, so my personal view is that breaking up the Crown Estate would not assist in that endeavour.

The right hon. Lady asked what constitutes an exceptional case. Essentially, the process is being judged equally by officials in the Welsh Government and the UK Government, and Ministers in both Governments will have equal decision-making powers. It is for them to judge the exceptionality of the cases based on what is submitted to them, but all will become clear in due course.

The right hon. Lady asked whether, were there to be more than one freeport, there would be two or more allocations of the £26 million. I can tell her that yes, that is the intention. She asked about the freeport in Liverpool. As she knows, Growth Track 360 held a reception here yesterday. Liverpool is of course an important element of the north-east Wales economy, and success in Liverpool’s economy benefits north-east Wales, so I urge her to bear that in mind.

[Liz Saville Roberts]

I am grateful for the Minister’s explanations and responses to my questions. It is worth putting on the record that Liverpool will have an effect on the whole of north Wales, along the A55 and into Ynys Môn. That is another argument for a counterbalance in the north-west for Caergybi, because that will, I hope, see developments across the north-west of Wales and into other counties, such as Gwynedd and Conwy.

[Dr Davies]

In many respects, the right hon. Member is making the case for investment across north Wales and into Anglesey. The agenda to upgrade infrastructure to link in with the north-west of England is also important to benefit north Wales. I hope that I covered most of her questions; should she have others, I am happy to answer them.

[Liz Saville Roberts]

There was one other question about reconsidering grid capacity in Wales. I would be grateful for a response to that.

[Dr Davies]

The right hon. Member makes a good point. Clearly, the Welsh Affairs Committee has considered these issues in detail. They are important to me, and the role of the Wales Office is to liaise with the Department for Energy Security and Net Zero, as it is now called, to ensure that grid capacity meets aspirations. I assure her that I hope to have that influence.

[Stephen Crabb]

I reiterate the point that the right hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) made about grid capacity. If we read in detail the evidence received by the Welsh Affairs Committee, we see that it is very clear that when it comes to investment in the grid, business as usual is simply not going to cut it. I appreciate that the Government are making efforts to secure more timely investment, but if we are to meet the targets and aspirations we have been talking about, we need to see a sea change.

[Dr Davies]

I take that point on very much board and thank my right hon. Friend for all his efforts in that regard.

Let me take the opportunity to outline other core elements of the Government’s levelling-up agenda. Wales is front and centre of our plans to level up the whole of the UK, and areas across Wales are already benefiting from more than £1.7 billion of local growth funding. From large-scale transport improvements to regenerating town centres and refurbishing cultural assets, the levelling-up fund will deliver lasting improvements in local communities across Wales, giving people renewed pride in their local areas. Ynys Môn alone is receiving £17 million from the levelling-up fund for the cultural regeneration of Holyhead town centre. I was pleased to visit a few weeks ago and see the efforts being made to ensure that people who use the port see all that Holyhead has to offer.

In total, the Government are investing more than £208 million in 11 projects across Wales through the second round of the LUF. That is almost 10% of the total UK allocation and builds on the £120 million that the Government invested in Wales in the first round of the fund. It is far more than Wales would have received through a Barnettised formula and is testament to the dedicated work of local authorities across Wales, which developed high-quality applications. The Government are also investing more than £790 million in Wales’s four city and regional growth deals. The deals are starting to deliver real change on the ground, from the Swansea Arena to investment in the digital signalling processing centre at Bangor University.

Furthermore, £2.6 billion has been allocated to places across the UK through the UK shared prosperity fund. Of that, £585 million has been allocated to Wales, including more than £126 million for north Wales. This trailblazing new approach to investment and the empowerment of local communities to level up and build pride in place will see direct investment in three local priorities: communities and place; support for local businesses; and people and skills. The funding is now in the hands of Wales’s four regional partnerships, through which local leaders are empowered to decide how best to invest the funding to better promote local growth, help to regenerate local economies and build a better future.

[Stephen Kinnock]

We are in danger of going down an SPF rabbit hole rather than discussing freeports, but as the Minister raised the SPF, I cannot resist. May I ring an alarm bell? As we head towards March 2025, when the long tail of European funding will tail off, there is going to be a cliff edge. Organisations that are delivering what is currently a sort of hybrid of EU and SPF funding are terrified that their projects will collapse, and have not had enough lead time to plan. Can I mark the Minister’s card in respect of the ticking time bomb with regard to the SPF? If he could look at a more flexible way of conducting the comprehensive spending review that does not have the arbitrary March 2025 deadline, that would salvage the programme. If he does not do that, we are in danger of seeing some difficult decisions having to be made in the very near future.

[Dr Davies]

I thank the hon. Member for raising his concerns about the shared prosperity fund. He will know that very large sums of money are being allocated through local authorities, and I hope he is having some input into that process in his own area, as I am in mine, and articulating his concerns, to ensure that projects that he feels are in need of support and protection in that respect get the hearing that they need.

I will move on from the SPF to conclude this excellent debate by again thanking my hon. Friend the Member for Ynys Môn for securing it. She is a champion for Ynys Môn on issues from the freeport bid to nuclear and green energy and transport connectivity. I know how important it is to her to see well-paid jobs on the island and to provide good reasons for young people to stay on Anglesey. I would welcome the opportunity to have further conversations with my hon. Friend about freeports in Wales once the competitive process concludes. Of course, that invitation extends to all right hon. and hon. Members.